5 ETFs Jump After Three-Day Rout: Will The Rally Last?

After the three-day rout, Wall Street bounced back as investors jumped to buy the dip in stocks. The rebound was broad-based yet the stocks that had plunged the most in the market rout recovered the most. Tesla (TSLA - Free Report) popped 11% on the day, after slumping 21% in its worst-ever trading day, while Apple (AAPL - Free Report) and Microsoft (MSFT - Free Report) gained about 4%.

This technology sector, which had pushed the Nasdaq Composite Index into correction territory, outperformed in the Sep 9 trading session. Notably, the S&P Tech sector notched its biggest one-day percentage gain since Apr 29.

Concerns about excess purchases of call options tied to the tech sector, delay in the late-stage trial of the leading COVID-19 vaccine candidates from AstraZeneca Plc (AZN - Free Report), election uncertainty, and a historically weak September month took a toll on the stocks. Though the combination of these factors will continue to keep the market volatile in the weeks ahead, the euphoria surrounding COVID-19 vaccine and continued support from the Fed should offer some upside to the stocks.

In a recent news conference, President Donald Trump said he believed a COVID-19 vaccine could be approved as soon as October. Further, encouraging data indicating that the American economy is gradually returning to the pre-pandemic level and that COVID-19 cases are moderating will add to the strength. In particular, the technology sector has become a defensive play as it has shown strong resilience amid the pandemic. The trend is likely to continue given the acceleration in the global digital shift for everything ranging from remote working to entertainment, and shopping.

The rapid adoption of cloud computing, big data, Internet of Things, wearables, VR headsets, drones, virtual reality, artificial intelligence, machine learning, digital communication and 5G technology will provide added advantage. One analyst Wedbush expect the tech stocks to go higher by an incremental 20-25%.

1 2 3
View single page >> |

Disclosure: Zacks.com contains statements and statistics that have been obtained from sources believed to be reliable but are not guaranteed as to accuracy or completeness. References to any specific ...

How did you like this article? Let us know so we can better customize your reading experience.


Leave a comment to automatically be entered into our contest to win a free Echo Show.